1978, Tony Seliba came to the Chicago Board Options Exchange and raised $50,000 to start his trading career. It had an unusually smooth start. By trading options with multiple volatility, Tony Seliba achieved a profit of over 50% in just two weeks. However, just when he was full of ambition, the volatility of the market suddenly decreased, and after six weeks, Mr. Seliba almost lost all his investment. Tony Seliba learned from his bitter experience and began to seek professional advice from experienced traders, and began to study crazily, gradually pulling himself back from the brink of collapse. In the turbulent market, Tony Seliba focused on a single stock and learned self-control by using spread trading tempering technology. During this period, Tony Seliba only traded one hand at a time, and was laughed at by brokers and traders. People laughed and called it "one hand". In the cold shoulder, Tony Seliba strictly abides by the creed of "work hard, do your homework and be self-disciplined", and abides by the goal of making an average profit of $300 a day. Finally, mature trading technology and strong self-discipline ability make him shine after the put option is listed and become a rare option trader.
In Tony Seliba's option trading operation, the most handy strategy is to combine the butterfly spread in recent months with the "short position option" in distant months. The strategy of buying butterfly option is a strategy suitable for the fluctuation of the underlying asset price range, which can be realized by using call option or put option. Taking call options as an example, buying a real call option, selling two flat call options and buying an imaginary call option can build a buying butterfly spread strategy. The exercise price range of the selected option contracts is equal, and the maturity date is the same. For example, the price of stock A is 50 yuan, so you spend 6 yuan's premium to buy a call option contract with the exercise price of 45 yuan, sell two call option contracts with the exercise price of 50 yuan at the price of 3 yuan, and buy a call option contract with the exercise price of 55 yuan at the price of 1 yuan. Without considering the transaction cost, the cost of this strategy is 1 yuan, that is, the maximum potential loss. Judging from the maturity profit and loss chart of buying butterfly spread, this is a conservative option strategy, which limits the risks on both sides. No matter whether the underlying asset price goes up or down, the risk of buying butterfly spreads is limited. As shown in the following figure, in this example, when the option expires, if the underlying stock price is in the range of 46 yuan to 54 yuan, the butterfly spread strategy will achieve profit. If the underlying asset price is equal to the exercise price of selling call options, this strategy will achieve the maximum profit, that is, 3 yuan. In practice, Tony Seliba often buys several butterfly spread options with different exercise prices to broaden the profit range.
In addition, Tony Seliba will also buy Yuan Yue's "explosive position" to create multi-market volatility.
His "short position" refers to a position with limited risks and open potential profits. For example, buy a Lerner option portfolio consisting of hypothetical call options and hypothetical put options. Le option is suitable for the market where the volatility of the underlying asset price increases, and its essence is to do more volatility. When the price of the underlying asset is expected to fluctuate greatly, but the direction is unknown, the strategy of buying both call options and put options at the same time can be adopted to obtain income. No matter whether the underlying asset price in the market rises or falls sharply, investors have the opportunity to make a profit.
In Tony Seliba's option portfolio, the butterfly spread in recent months is used to earn time value. If the underlying price does not change significantly or the volatility increases, the value of the option will decline over time. In a stable market, the time value loss of flat option contract will be faster than that of imaginary or real option contract, that is, the time value of butterfly middle option will decline faster than that of two wings. Under the premise of risk control, the butterfly price difference in recent months can earn income stably in a stable market. In Tony Seliba's matrix combination, explosive positions are applied to distant months, and the time value loss of distant month options is slower than that of recent months. Tony Seliba often uses imaginary options to build "short positions" to reduce the cost of the strategy.
During his decades of trading career, the music option with limited risks and unlimited potential benefits helped the investment master to achieve brilliant trading records again and again.